IFBC Insights – Best practice in financial bank management at Swiss banks

Financial bank management is the central instrument used by bank CFOs to ensure the economic value creation of their bank. In expert discussions with CFOs of Swiss banks, the best practice of financial bank management was defined and the design of the financial bank management at Swiss banks was assessed.

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Key Takeaways

• IFBC defines the best practice in financial bank management through eight principles that consider both strategic and operational aspects.
• The Swiss banks have invested in the further development of the operational aspects of financial bank management in recent years and fulfill the associated principles accordingly well to very well
• However, the conceptual design of the financial bank management and the establishment of a mindset for economic value creation can still be improved at most Swiss banks.

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Current developments in the areas of technology, regulation and society as well as the constantly changing economic environment are presenting banks with major challenges today (see our blog "IFBC Insights - Current challenges in the Swiss banking environment"). In this context, the design of the financial bank management is becoming even more important. Based on many years of experience, enriched with insights from expert discussions with bank CFOs, IFBC identifies 8 principles for the best practice in financial bank management

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The design of the financial bank management in the Swiss banking sector was assessed based on these 8 principles:

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The assessment shows that Swiss banks are only partially successful in establishing a mindset for economic value creation. For example, most banks calculate overarching KPIs to measure the profitability of the bank as a whole, but these are rarely directly linked to the definition of value-creating strategic or operational targets. This makes a comprehensive and holistic financial bank management difficult. Most of the banks surveyed have the necessary transparency regarding the profitability of products and customers. However, there is a wide variation here, as some Swiss banks lack this transparency in performance measurement. The financial management and planning processes of the Swiss banks are predominantly efficient and system-based.

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In general, Swiss banks have invested heavily in the further development of the operational aspects of their financial bank management in recent years. Accordingly, processes, systems, the data basis and financial reporting have been improved. However, many Swiss banks still have potential for optimization in the conceptual design of financial bank management. Placing economic value creation at the center of their activities and linking it to strategic and operational objectives represents the next step in the further development of the financial bank management for many institutions.
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Conclusion
The Swiss banks have been able to improve the operational aspects of their financial bank management in recent years. As a next step, the anchoring of economic value creation in the financial bank management should be at the top of the agendas of CFOs at Swiss banks.

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IFBC supports its clients from t^he banking sector in designing and implementing financial bank management in a targeted manner. For detailed findings from the study, please contact: Christian Hirzel and Noel Sager.

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More information on Financial Services.

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You may also be interested in our article on Value-based Management.